How to Design an Effective Loyalty Program for Your Patrons

A loyalty program is a good way for a company to reward their customers while also gaining more insight on their sales and improving their profits at the same time. Follow this systematic guide for more information on how to create the perfect loyalty program.

As a business owner, it is important that you show your customers how much you appreciate them. They are the people who keep your company growing, the faithful patrons who come back repeatedly and spread the good news to others about what products or services you offer. One great way to ensure that your customers always know just how much they are valued is to offer a customer loyalty program.

Shockingly, a recent study found that 66% of small businesses do not have a loyalty program in place, though the market is making an overwhelming shift towards a more customer-centric focus. If you do not have a strategy in place to show your appreciation, now is the time to get onboard. Follow these steps to design an effective loyalty program for your patrons.

What is a loyalty program?

A customer loyalty program is often referred to as a “rewards program.” This is a promotional offer that is provided by the company to the customers who frequently visit their location. The benefits of a loyalty program can include everything from free merchandise to special discounts on the products they buy most.

Customers usually fill out a simple form with their name and contact information to enroll. Then they are presented with a membership ID or card to use whenever they make purchases. They may receive benefits in the form of points that add up to provide money-saving discounts. These programs will often allow members to have access to special promotional merchandise, and some loyalty programs even provide discounts at participating gas stations, allowing you to fill up for less.

There are basically two main functions of a loyalty program. They provide the customer with rewards for remaining loyal to the brand, and they give the company the added benefit of consumer information. The use of a loyalty membership allows business owners to learn more about what products their customers purchase most, which items are purchased together frequently, and which coupons they offer are the most effective.

What goals should you hope to achieve with your loyalty program?

While your loyalty plan is designed to provide your customers with rewards, it should also help your company grow and prosper. Therefore, you should set some goals in place that you plan to reach by enforcing your customer loyalty plan.

Before you decide what type of loyalty plan you wish to offer and what type of rewards you want to give to your patrons, you should decide what you want to get out of the program. Do you hope to improve customer acquisition? Increase the size of your orders? Reach out to customers that are outside your target range? Be sure to make your goals specific and within your reach.

It is a good idea to set a timeframe to the goals you hope to reach. If you would like to decrease customer turnover by around 30 percent within the next year, you should come up with a timeframe that will keep you on track. This will help you reach each goal and allow you to see the progress that you have made by creating your loyalty program.

How to build the perfect loyalty plan

After you have set your goals into place, it is time to start putting your loyalty plantogether. You will need to think about who will be eligible for your plan. You may only want to allow customers who have made a certain number of purchases from your store to enroll. Or you may feel that everyone should have the right to take part in your program. Having multiple tiers of rewards is a good way to incentivize your customers to continue to purchase after the initial reward.

You may even want to focus on customers who purchase specific products, such as creating a plan for dog owners if you own a pet store or an exclusive cat owner plan, for example. Having a targeted group will give you the opportunity to reward customers with ideal buying behavior and allows you to offer various types of promotional merchandise as rewards. By segmenting your program this way, you are able to get more strategic with the promotional products they receive.

Continuing with the pet store example, you may offer a custom dog bowl to customers who frequently purchase items for dogs, whereas patrons shopping for products for snakes would not find the value in this reward. Offering tailored merchandise that resonates with your targeted group will drive a stronger sense of loyalty from your program.

The loyalty plan that you create is completely up to you. You should focus on your customer’s buying activity to find out which plan will work best and benefit you the most.

Make your loyalty plan automated for easy access

Next, you should focus on making your program easier to access. You can require that your customers supply you with an email address so that you can send out a welcome email as soon as they sign up. The email could supply them with more information about the loyalty program and how it works. It could also direct them to your website where they could sign up for a free account and manage their customer rewards or points.

Plus, if a customer ever needs to change their information such as their address or phone number that is linked to their account, they can do so directly from the website. The easier that a loyalty program is to access, the more effective it will be. This is a great way to allow the customer to have more control over their membership and cause them to be more active in the program, making it more successful for you overall.

Keep in touch with your members

Once you have your customer’s attention, and they are interested in earning rewards, coupons or gaining access to promotional merchandise, you will want to keep them informed on what is going on with your company. You could start an email mailing list that would send out weekly or monthly updates about special deals and promotions in your store. Or you may want to send coupons in the mail after your customers have reached a certain milestone in their membership.

You can use customer-relationship management software, that will provide you with details about your customer base which can help you find out more about what products they buy most. This is a great way to learn more about customer buying activity so that you know which coupons to send out to specific patrons.

Go social with your program

When you start a loyalty program for your customers, you want all your patrons to know about it so that they can sign up and start saving. The best way to inform all your customers at once is to create a social media account if you haven’t already. Using platforms such as Facebook, Pinterest or Twitter will allow you to reach out to the masses and let everyone know that you now offer special coupons and rewards to all customers who sign up. This could help you gain more customers since many people may “like” or “follow” a company even if they don’t shop with them often.

Anna Sork is the Marketing Manager at Anthem Branding, a leading design agency based in Boulder, Colorado. A digital marketing strategist by day and content curator by night, her passion for developing data-driven campaigns and helping brands emotionally connect with their audience flows through her insider expertise.